Despite some fears that the US economic slowdown could also harm Canada’s macroeconomic indicators, the food and drinks market is expected to continue performing solidly over the forecast period, rising by just under 15% in value through 2012. The market will be characterised by consolidation on the one hand, and by premiumisation on the other, as several firms pitched at the lower-end of the market have already struggled. Thrown in this mix is the increased focus on health, wellness, and quality foods, as Canadians get older and wealthier, which are some developments that need to be borne in mind when approaching the market.

However, the increased competition in the market is driving some Canadian producers to look abroad, or to alternative avenues of growth. To this end, Canadian beverage firm Clearly Canadian reported its first increase in revenues for 10 years after moving into the baby food and healthy snack markets, while revenues from the firm’s flagship beverage division continued to slide. Around the same time, Clearly Canadian acquired a kosher meat business, Baldwin Street Kosher, in a bid to move further away from its flagging beverages business. In the meantime, seafood and fish products company Icelandic Group USA sold its Canadian shrimp subsidiary Ocean to Ocean in a management buyout, following months of financial difficulties.

As in previous quarters, the food and drink – as well as mass grocery retail (MGR) – markets have witnessed a considerable amount of activities. Catering to changing Canadian demands, in May 2008, US-based YoNaturals, which specialises in healthy alternatives to junk food vending machines by stocking natural or organic snacks and drinks, opened its first Canadian branch. Similarly, Canadian natural products retailer Planet Organic Health Corp posted strong third-quarter sales, illustrating a continuously rising demand for organic products. Around the same time, Canada-based SunOpta, which specialises in natural and organic food, completed the acquisition of Dutch firm Tradin Organic Agriculture, one of Europe’s largest suppliers of basic organic commodities. The move marks SunOpta out as one of the largest suppliers of organic products in the world.

The demand for organic and premium foods is also being addressed by mass grocery retail (MGR) operators, which are increasingly struggling as their profits are squeezed by an aggressive price war. In April 2008, Canadian retail chain Loblaw developed a new upmarket store format designed to differentiate itself from the emerging threat of Wal-Mart’s expanding hypermarket network. The new stores under the Loblaw Great Foods banner will focus on products that appeal to higher-end shoppers. Similarly, A&P Canada launched a ‘Leave it Greener’ environmental campaign, aiming to boost awareness among shoppers through display cards that emphasise eco-friendly products.